The new Family Law Act — Dividing property

On November 24, 2011, BC’s new Family Law Act was introduced. It will come into effect March 18, 2013. This act will have wide-reaching effects on family law in the province. Here is a summary of its effect on property and debt division. For more information, see the act itself and our introduction to the act.

If spouses are trying to decide how to divide property, they must first figure out whether each item they own is family property or excluded property. Under the Family Law Act, spouses are either married people or people who have lived together in a marriage-like relationship for at least two years.

Excluded property includes:

any property that each spouse owned before the relationship started

gifts and inheritances given to only one spouse during the relationship

compensation payments made to one spouse only for personal injury or loss (unless it was meant to compensate both spouses or involves income that was lost during the relationship)

insurance payments made to one spouse only for personal injury or loss (unless it was meant to compensate both spouses or involves income that was lost during the relationship)

Excluded property belongs to the spouse who bought or received it. However, if the property becomes more valuable during the relationship, the increase in value is considered family property.

Family property is property that either or both spouses acquire while they are together, plus the increase in value of each spouse’s excluded property. The law assumes that spouses share this property equally.

In some cases, the court may divide excluded property or may divide family property unequally. The court might do this if it would be “significantly unfair” not to. Until the new act goes into effect and cases are decided by the courts, it isn’t completely clear exactly how the court will interpret what is significantly unfair and what isn’t.

Under the current Family Relations Act, almost all property owned by either spouse may be divided. Only married spouses can apply to divide property under this act.

A note on debts

The new act also allows the court to divide responsibility for “family debts.” Family debts are debts you take on during your relationship that:

are still owed on the date you separate, or

are taken on after your separation date to maintain family property.

These debts are shared equally unless there is an agreement or court order that says differently.

Our thanks to JP Boyd for providing the background for this series. You can find more information on the new Family Law Act, as well as other family law issues, at his BC Family Law Resource Blog.